City, co-op fight for disclosure in SME bankruptcy

Great Falls, Beartooth Electric fight confidentiality provisions in SME bankruptcy

Associated Press

BILLINGS, Mont. (AP) -- A federal judge will consider Tuesday whether a bankrupt Montana power cooperative can keep key details of its reorganization plan secret from the public.

The trustee for Southern Montana Electric Generation and Transmission Cooperative wants U.S. Bankruptcy Judge Ralph Kirscher to issue a protective order barring disclosure of how much it would pay for power from Morgan Stanley Capital Group.

Attorneys for trustee Lee Freeman said in court filings that disclosing the information on prices would hurt Southern Montana and undermine the reorganization plan. He said it would expose electricity prices to potential "manipulation by well-informed participants."

But two Southern members, the City of Great Falls and Beartooth Electric Cooperative, oppose the protective order. They say customers should have access to details such as the future rates they could be asked to pay for electricity.

"The citizens of Montana have invested millions of dollars in Southern Montana," Doug James, the city's attorney wrote in documents submitted to the court. "With that money comes the obligation to allow disclosure and participation."

James added that the protective order would violate the "Right to Know" provision of the Montana Constitution.

Freeman's attorneys said in response to the objections that the information they want to protect is exempt from federal and state public disclosure laws, and that the bankruptcy judge has the power to supersede state law regardless of any protections.

PPL Montana also opposes the confidentiality order sought by Southern. The company said much of the information Freeman seeks to conceal would eventually be revealed through public filings with government agencies.

Southern Montana, composed of five rural cooperatives and the city of Great Falls, filed for bankruptcy in 2011 after contracting with PPL Montana for more power than it needed at high rates and trying to borrow $215 million to expand the gas-fired Highwood Generating Station to 250 megawatts.

Several of its members, including the city of Great Falls, have sought to get out of the cooperative. But Freeman's reorganization plan calls for keeping the electricity wholesaler together by restructuring its debt and holding on to the 40-megawatt power plant near Great Falls.

Also Tuesday, Kirscher will consider whether Southern Montana's largest member can leave the cooperative under a proposed settlement.

The 17,000-customer Yellowstone Valley Electric Cooperative would pay a $2.5 million exit fee under a tentative deal with the troubled parent co-op. Southern Montana also would transfer a portion of the power it buys from the Western Area Power Administration to Yellowstone Valley, and Yellowstone Valley would drop $7 million in claims.

If the settlement is approved, Yellowstone Valley would rejoin Central Montana Generation and Transmission, which would in turn supply power to Yellowstone Valley's members, said John Crist, Yellowstone Valley's attorney.

The exit is opposed by three members of Southern Montana — Fergus Electric Cooperative, Mid-Yellowstone Valley Electric Cooperative and Tongue River Electric Cooperative. They say the settlement should be included in the confirmation proceedings for Freeman's bankruptcy plan, tentatively set to begin in late May.

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